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First things first: find out how much you can spend before you go shopping. Make the phone call and talk to a lender before you look at real estate. If you are thinking of buying a new outfit, you need to know how much credit and cash you have before shopping. The same is true for a home. Use a lender that knows what they are doing and most importantly, if you cannot qualify today, be sure they can tell you why you do not qualify and what you need to do to repair your credit. It costs nothing to get qualified and sometimes only a minimal down payment is required. A 10-minute phone call goes a long way.
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What most people don’t understand is that the foreclosure process involves the lien holder exercising their rights to sell the property at public auction (if someone defaults on their loan). When buyers purchase a foreclosure, they are standing in a public area and bidding on a property. If they are the winning bidder on the property, they must provide a cashiers check right then and there. In other words, unless you have cash, you are not buying a foreclosure at the courthouse steps. Also, when a Reno home is purchased at the courthouse steps, you are taking the property subject to priority liens. In other words, and this is based on a true story, you could buy a home for $40,000 at a public auction and there could still be a $300,000 priority lien. If not paid off, they could foreclose on you and you are out your investment. Read the next paragraph.
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Understanding the difference here is key. An equity sale is a property with no conditions of sale, which means the final negotiated price will leave the seller of the home with money in his/her pocket. (For instance, if a seller sold his property for $100,000 and the buyer owed $40,000 on the house, the buyer would have paid off the loan and had $60,000 in his/her pocket). With an equity sale, there are certain advantages to a buyer. For example, you get to deal directly with an individual decision maker, which makes it easier to ask for concessions and get answers to questions. The biggest advantage of an equity sale is how quickly you can close a transaction. The main disadvantage of an equity sale is that - sellers may or may not be motivated to sell, which means they can hold onto their price.
With a short sale, the seller owes more on the property than what they can sell the property for (and the seller wants to avoid a foreclosure). For example, the seller can sell the property for $100,000, but still have a loan of $160,000 owed to the bank (aka lien holder). Once the seller accepts, they must go to the bank and ask if they will accept $100,000 rather than the $160,000 that was owed. With short sales, there are advantages to the buyer: The seller is motivated to sell and usually prices the property very low. Also, the property is typically in good shape, as the owners are usually still living there and want to avoid a foreclosure. Beware, there is also a major disadvantage to the buyer: time. The process to get the lien holder’s approval can take some time (usually between 30 and 120 days). The lien holder may choose to counter offer at higher than the listed price.
An REO (which stands for real-estate-owned property) is a property that was taken back through the foreclosure process. Sometimes these are referred to as bank-owned properties. Basically, with an REO, no one bid on the property at the public auction and it went back to the bank; the bank now owns the property. The seller of the property is the bank and you are now forced to negotiate with the bank. With REOs, there are certain advantages to the buyer: The bank is motivated to sell, which means the property is usually priced lower. Plus, it’s typically quicker to get an answer than when dealing with a short sale. There are also a couple of major disadvantages: The property is usually bought “as is” and since it went through the foreclosure process, the previous owners usually did not maintain the house very well. Also, the bank has guidelines when negotiating and there is little room for negotiating.
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Nothing; that was an easy one. In 99% of all transactions, the seller pays the real estate agent’s fee. How does this work? When an owner of a property sells their home, they sign a listing agreement, which allows the “listing agent” to advertise the home for sale, put a sign in the yard and post the property to the local MLS to find a buyer. When the listing agreement is signed, the “fee” is structured at 6% of the sales price when the property sells. The agreement says that the “listing agent” will offer half of the commission to another agent if they bring a buyer to buy the home. This fee is paid no matter which involved agent finds the buyer.
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“Should I buy or continue renting?” We here this question a lot. Here’s how we typically answer it: It does not always make sense to buy a home, just ask anyone who purchased during the 2004-2007 boom. So, when does it make sense to buy a home? Consider
what your payments would be if you could buy the house you are currently renting. Select the “Property Value” tab on the side of this website and I will provide an estimate for you.
If your monthly payment as a homeowner would be less or about the same as your rent, you may want to consider purchasing a home in Reno. With a 30-year fixed-rate mortgage, your payments will remain the same and won’t/can’t go up. After 30 years you will own the home. If you plan on moving, perhaps you can eventually gain cash flow. In addition to the pride involved with ownership, you may also receive some good tax benefits.